Mammalian transduction vectors based on adeno-associated virus (AAV) may retain properties attributed to the wild-type virus. Wild-type AAV replicates to high titer in permissive cells, has a physically stable particle, integrates into the cellular genome, is non-cytogenic, and is considered to have broad host range and does not appear to be restricted in tissue tropism. In addition, cell division is not considered essential for viral infection. Production of recombinant AAV (rAAV) requires expression of AAV rep and cap genes in trans and the presence of the AAV inverted terminal repeats (ITR) in cis. Generation of rAAV may be limited by the copy number of the viral structural genes transfected into cells, whereas in a wild-type AAV infection, the copy number increases geometrically as the viral genome is replicated. To overcome this obstruction, we have utilized an SV40 origin of replication on a rep and cap containing plasmid. This plasmid is amplified in cells expressiong SV40 T-Ag. In conjunction with high efficiency electroporation, the yield of recombinant viral particles was increased 60-fold over a non-replicating helper plasmid. Following CsCl isopycnic gradient centrifugation, the fractions containing rAAV were identified by transient infection assays and DNA dot blot hybridization. The density of the rAAV particles was 1.40 - 1.42 g/ml. Hybridization of the gradient fractions demonstrated that the recombinant AAV was essentially free of contaminating adenovirus. Furthermore the particle size was of approximately 20-25 nm was determined by electromicrographs of the banded material. Both the buoyant density and physical appearence are similar to those determined for wild type particles. This novel rAAV packaging system has been used to produce rAAV particles which contains the gene for the T-cell co-stimulatory protein, B7-2. Transduction of the human, non-adherent lymphoid cell line, LP-1 transduced with B7-2 encoding AAV resulted in 78% of cells expressing B7-2. Expression of B7-2 in the human lymphoid cell line RPMI 8226 was also substantially increased.